P Chidambaram keeps fingers crossed on rupee appreciation

With the battered rupee showing signs of strengthening, Finance Minister P Chidambaram today said he is keeping his fingers crossed

NEW DELHI: With the battered rupee showing signs of strengthening, Finance Minister P Chidambaram today said he is keeping his fingers crossed.

"We are fighting many unknown factors in the currency markets. Yes, the currency has appreciated in last 3-4 days. But I keep my fingers crossed," he said while replying to a debate on the appropriation bill in the Rajya Sabha.

The rupee, which fell to almost 69 against the dollar last month, has recovered some lost ground on the back of announcements made by Raghuram Rajan, who took over as RBI Governor on Wednesday. The rupee rose 77 paise yesterday to close at 65.24, the highest level in almost two weeks.

The rupee has depreciated due to capital outflows amid fears of an early withdrawal of the US monetary stimulus. The Federal Reserve had on May 22 indicated it may start tapering its bond-buying programme as the US economy recovers, spooking the global markets.

Chidambaram said the Fed statement was a "bolt out of the blue."

He said steps have been taken to check volatility in the currency market and more are in the offing.

"Measures are being taken and measures will be taken to increase the inflow of dollars into the country," he said.

India and Japan agreed to increase their currency swap facility to USD 50 billion from USD 15 billion, an arrangement that is expected to contribute to the stability of the financial markets.

"Japan has agreed to USD 50 billion swap with India. And I take this opportunity to thank Japan. Japan is a true friend," the Finance Minister said.

Also, the BRICS grouping, consisting of Brazil, Russia, India, China and South Africa, have decided to create a USD 100 billion facility to help them navigate through an imminent phase out of the US stimulus.

"We have to look after ourselves. No developed country will look after us. The emerging economies and developing countries have to get together. We are looking at some other arrangements of similar nature that will give us much greater degree of comfort in the foreign exchange side," he said.

The Minister said measures will be taken to curb the import of "inessential" items, also considered one of the reasons for the rupee's depreciation.